Planning for the future involves making important decisions about your assets and how they’ll be distributed after you’re gone. At Barr & Douds, our team of experienced trust administration attorneys has guided countless Californians through this crucial process. Two primary estate planning tools available in California are wills and living trusts. While both serve to distribute assets, they operate differently and offer distinct advantages.
This comprehensive guide compares the living trust and will in California, helping you determine which option — or combination of options — best suits your needs.
What Is a Will in California?
A living will is a legal document that specifies how you want your estate assets distributed after your death. It allows you to name an executor to manage your estate through the probate process and appoint guardians for minor children. If you pass away without creating a valid will, California law on intestate succession (California Probate Code §§ 6400-6455) will determine who inherits your property, often with results that might not reflect your wishes.
Requirements for a Valid Will in California
To create a legally binding will in California, you must:
- Be at least 18 years old and of sound mind
- Create a written document (handwritten wills, known as holographic wills, are accepted in California if meeting certain requirements)
- Sign the will in front of two disinterested witnesses
- Have your witnesses sign the will
What a Will Can Do
A properly executed will allows you to:
- Name guardians for minor children
- Designate an executor to manage your estate
- Specify how to distribute assets to beneficiaries
- Create testamentary trusts
- Express funeral and burial wishes
Limitations of Wills
Despite their importance, wills have several limitations:
- Assets must go through probate court
- The probate process can be lengthy (typically 9-18 months or more in California)
- Probate costs can be significant (statutory fees based on estate value)
- Probate records become public record
- A will only takes effect after death, offering no protection if you become incapacitated
What Is a Living Trust in California?
A living trust is a legal arrangement where you (the grantor) transfer assets into trust ownership. The trust is managed by a trustee (often yourself initially) for the benefit of your chosen beneficiaries. Upon your death, your successor trustee distributes the trust assets according to your instructions, bypassing the probate process.
Types of Living Trusts
- Revocable trust: A revocable living trust allows you to maintain complete control over trust assets during your lifetime. You can modify, amend, or revoke the trust at any time. Most Californians who establish trusts opt for this flexible option.
- Irrevocable trust: Once established, an irrevocable trust cannot be easily changed or revoked. While this limits flexibility, it may offer advantages for potential federal estate tax savings and asset protection from creditors.
How a Living Trust Works
- You create a trust document naming yourself as initial trustee.
- You transfer assets into the trust (changing titles and deeds accordingly).
- You manage trust assets normally during your lifetime.
- If you become incapacitated, your successor trustee manages the trust assets.
- Upon your death, your successor trustee distributes assets according to trust instructions, avoiding probate.
What a Living Trust Can Include
A living trust can hold nearly all types of assets:
- Real estate
- Bank accounts (converted to trust accounts)
- Investment accounts
- Business interests
- Personal property (artwork, jewelry, etc.)
Certain assets like retirement accounts and life insurance policies typically use beneficiary designations rather than being placed directly in the trust.
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Key Differences Between Wills and Trusts
The following are some of the main differences between a living trust and a will in California:
- A living trust, unlike a will, can keep your assets out of probate proceedings.
- A trustor names a trustee to manage the assets of the trust indefinitely. Wills name an executor to manage the assets of the probate estate only until probate closes.
- Trusts tend to be more expensive and more complex to maintain than wills.
- In a trust, information about your estate stays private. In probate, information about your estate is made public.
- A Declaration of Trust, not a will, establishes the terms of the distribution of trust assets. The trustee is bound to observe these terms. A Declaration of Trust contained within a will creates a testamentary trust.
- If you establish a trust and then die, the only interruption to the trust will be the accession of a successor trustee if you were the trustee at the time you died. The administration of trust assets will not be otherwise affected by your death.
- Unlike the probate of a will, your estate is not required to pay a probate attorney or court fees in response to your death.
- A living will vs. living trust: A “living will” is not what most people mean when they refer to a will. Instead, a living will set forth your wishes for end-of-life medical treatment. Do you want to be kept alive on machines, for example? Never confuse a living will and a trust.
The two main reasons people create trusts are to avoid probate and take advantage of their flexibility.
Below is a table of comparison of the two options:
| Feature | Living Trust | Will |
|---|---|---|
| Probate | Avoids probate | Requires probate |
| Cost | More expensive to set up | Less expensive to set up |
| Privacy | Keeps assets and distribution private | Assets and distribution become public record |
| Control | Grantor maintains control during life | Takes effect only after death |
| Incapacity | Provides for management if incapacitated | Does not address incapacity |
| Complexity | More complex to create and maintain | Simpler to create |
| Flexibility | Can be changed during life (if revocable) | Cannot be changed after death |
| Best For | Large estates, avoiding probate, privacy | Small estates, simple distribution |
Which One Should You Choose: Living Trust or Will?
The decision between a living trust and will in California depends on your specific circumstances, including:
When a Will Might Be Sufficient
- You have a relatively small estate under California’s small estate threshold.
- Your assets are primarily held in retirement accounts and life insurance policies with named beneficiaries.
- You don’t own real estate.
- You’re primarily concerned with naming guardians for minor children.
- You prefer a simpler, less expensive estate planning option.
When a Living Trust Makes Sense
- You own real estate or have substantial assets.
- Avoiding probate is a priority for you.
- You’re concerned about privacy (probate is a public record).
- You want to protect assets in case of incapacity.
- You have complicated financial circumstances or blended family situations.
- You seek potential estate tax savings.
- You want to manage how and when beneficiaries receive their inheritance.
Using Both Together
Many comprehensive estate plans include both a living trust and a will. The will can act as a “pour-over will” that catches any assets not transferred to your trust and names guardians for minor children, while the trust handles the bulk of your asset distribution and probate avoidance.
Do I Need a Will or Living Trust?
Barr & Douds, a team of California estate planning attorneys, have extensive experience in drafting hundreds of will and living trust documents for their clients. We know how to prepare an estate plan that is tailor-made to suit your needs and preferences. Contact us online, or by telephone at (925) 660-7544. We represent clients from all over the Bay Area, including Berkeley, Danville, Livermore, Oakland, Pleasant Hill, Pleasanton, Richmond, San Francisco, or Walnut Creek.
